Tomahawk, WI 8/19/2013 (Basicsmedia) – It is not every day that a company such as Cisco Systems, Inc. (NASDAQ:CSCO) will report profits in its latest financial results and do something which is a bit shocking, such as firing close to 5% of its entire workforce. This is what is happening right now with this major developer, manufacturer and seller of networking services and solutions which are IP-based. CSCO can rightly be classified as a global company based on the fact that its operations are found ion the U.S, Canada, Japan, Asia Pacific, Europe and what are generally known as emerging markets.


Understanding CSCO’s Decision to Fire Workers

Moreover, it doesn’t make sense for a company like CSCO to announce to the entire world that it has acquired new businesses, and still proceed to fire a significant portion of its employees. The company recently announced that it had acquired JouleX and Composite Software Inc, both which were privately held, in May and July 2013 respectively. It would seem obvious to an outsider that the company would then relocate its employees to work in the new opportunities which were created after the successful completion of such ventures. This isn’t happening.

CSCO Still Outperforms its Competitors

CSCO has recently reported a huge increase or growth in its datacenter segment. This increase is one of the reasons which led to the huge profits the company recently posted. CSCO saw its profits improving by about 18%, despite the intense competition they had to put up with. The question which needs answers is why the company would take such a step when everything seems to be working for it. When making this decision, the top executives at CSCO stated that they are doing this in order to improve their response in the market whenever changes take place.

When companies lay off workers, it is often assumed that this is being done to forestall a few negatives. However, CSCO says that it wants to shift its focus to pursue a more team-oriented approach when tackling the new challenges presented in the market. This company believes that it can’t respond to situations in the market or industry in the same manner it has been doing for quite some time, as this will create a negative image in the minds of its customers. Therefore, there is no reason to believe that Cisco is on its way down simply because of this development.

As a demonstration of how CSCO has seen an improvement in its performance, it has been reported that it sells more equipment used in cloud infrastructure compared to its direct competitors such as IBM and Hewlett-Packard. In the same period in 2012, CSCO reported profits of $1.92 billion, which surged in 2013 to $2.27 billion. Its datacenter products are still relatively new in the market, since this segment of the company wasn’t in existence until very recently. This segment saw an increase in its revenue as well, to the tune of 43%.

CSCO’s Obligations to Customers and Shareholders

CSCO has an obligation both to its investors as well as clients. While its clients expect the best products and services in the market, investors expect to enjoy better return on their investments with this company. The decision to lay some workers off, about 4,000 of its employees will be affected, is informed by this desire to please both shareholders and customers. It hopes that this decision will make it more profitable and attractive to investors, while increasing its ability to respond to client needs and problems. I still think CSCO is a top performer and worthy stock.

DISCLAIMER: This content is neither an offer nor recommendation to buy or sell any security. We hold no investment licenses and are thus neither licensed nor qualified to provide investment advice. The content in this report or email is not provided to any individual with a view toward their individual circumstances. While all information is believed to be reliable, it is not guaranteed by us to be accurate. Individuals should assume that all information contained in our newsletter is not trustworthy unless verified by their own independent research. Also, because events and circumstances frequently do not occur as expected, there will likely be differences between the any predictions and actual results. Always consult a real licensed investment professional before making any investment decision. Be extremely careful, investing in securities carries a high degree of risk; you may likely lose some or all of the investment.